Intel is losing ground in the desktop PC market, but growing in laptops
At the quarterly reporting conference, Intel management did not hide that they associate the fall in demand for desktop components with the increased popularity of laptops. The latter remains the most popular tool of labor among those who are forced to be in self-isolation. Intel’s revenue in this area is 2.5 times higher than from the sale of desktop components.
It is not the first year in a row that notebooks have dominated desktop systems in terms of sales, but there are significant changes in Intel’s revenue structure in the second quarter of this year. A year ago, revenue in the notebook segment was only 1.86 times higher than in the desktop segment, now the gap has widened to 2.46 times. The company’s management does not hide its fears about the continued low demand for desktop components until the end of this year, but about the demand for laptops in the third quarter expresses confident optimism.
Intel desktop component sales declined 14% in the second quarter. In annual comparison, revenue in the consumer sector grew by $ 655 million, but the growth could have been significantly higher if not for the drop in demand in the desktop segment. Here, revenue decreased by $ 460 million, while the average price growth of 3% somewhat compensated for the situation, providing $ 61 million. In the laptop segment, sales increased by 9%, the average price increased by 5%. Intel’s notebook component sales contributed 29.6% of consolidated revenues in the second quarter. The share would be even higher if it were not for a sharp increase in revenue in the server direction.
As noted, Intel plans to increase its annual production of 10nm products by 20% over the January plan. This will incur additional costs and has already reduced Intel’s profit margins to an eleven-year low. Since the beginning of this year, the negative impact of this factor on Intel’s operating profit amounted to $ 1.71 billion. In other words, Intel’s operating profit was 20% lower than the level that could have been achieved if it was not for the need to increase the production of 10nm products. Most of them, presumably, are concentrated in the mobile segment: both Ice Lake processors and the upcoming Tiger Lake processors are released using 10-nm technology. low-power Lakefield chips, due to limited circulation, are unlikely to greatly affect the situation, but components for base stations of the Snow Ridge family are in high demand, according to Intel representatives. By the end of the year, Intel’s range of 10nm processors will be supplemented with Ice Lake-SP server processors.
